Trial Tied to Liu Delayed

Mental-Health Issue Leads to Hospitalization of a Fundraiser Accused of Fraud

By

Sean Gardiner and

Michael Howard Saul

Feb. 5, 2013 8:49 p.m. ET

A federal fraud trial that has cast a shadow over New York City Comptroller John Liu's plans to run for mayor could be delayed for months after a judge said on Tuesday that one of the defendants—a former campaign fundraiser for Mr. Liu—has been involuntarily hospitalized for a mental-health issue.

The trial of fundraiser Xing Wu "Oliver" Pan and his co-defendant, former Liu campaign treasurer Jia "Jenny" Hou, was scheduled to start this week but now could be postponed for as long as two months.

Manhattan federal court Judge Richard Sullivan said Mr. Pan, a New Jersey businessman, would be in the hospital for an "undetermined and potentially indefinite duration." He set a new trial date of April 15 but said it could begin earlier if Mr. Pan is found competent to stand trial.

After the hearing, Mr. Pan's defense lawyer, Irwin Rochman, declined to discuss the specifics of his client's condition or say where he is hospitalized. "This is tough," Mr. Rochman said.

Mr. Pan's health problems first surfaced on Friday, when he failed to appear at a hearing.

The development was one of many surprises in a case that has been closely tracked by New York's political world and has complicated Mr. Liu's ambitions for more than a year.

Mr. Pan and Ms. Hou are accused of using so-called straw donors to get around laws that prohibit any individual from donating more than $4,950 to a citywide campaign. Under the alleged scheme, donors are recruited to give what appear to be legitimate contributions to the campaign. Those donors, however, are allegedly secretly reimbursed, usually from money provided by another donor who wants to give more than the limit. Mr. Pan and Ms. Hou have pleaded not guilty.

Mr. Liu hasn't been accused of any wrongdoing and he has said repeatedly that he stands by his campaign fundraising operation.

Before a Manhattan town hall meeting with labor officials on Tuesday evening, he said he didn't know why Mr. Pan had been hospitalized. "I hope he's OK, and I hope the proceedings can get under way as quickly as possible," Mr. Liu said.

A Democrat and the first Asian-American elected to citywide office, Mr. Liu has been preparing a run for mayor. He hasn't declared a candidacy but regularly appears at mayoral forums and speaks about what he would do if New Yorkers elected him to succeed Mayor Michael Bloomberg.

"This is not changing my plans," he said Tuesday. "We've got very solid plans. We're going full steam ahead on all cylinders."

A long trial delay could push the proceedings closer to the September primaries, when voters will be paying more attention to a crowded field of hopefuls. "It keeps the sword of Damocles still above his head," said Doug Muzzio, a professor of public affairs at Baruch College.

The comptroller has publicly backed Ms. Hou but has kept more distance from Mr. Pan, who is accused of plotting with an undercover federal agent to steer $16,000 in illegal donations into the campaign. Mr. Liu's supporters hope that the political fallout would be minimal if Mr. Pan is convicted. Ms. Hou left the campaign after she was charged in February 2012.

In court, Judge Sullivan told Mr. Pan's defense team he expected an assessment from Mr. Pan's physicians by Friday or he might appoint an expert to examine the defendant.

Mr. Rochman said that in a recent conversation, Mr. Pan was "coherent [and] able to communicate with us, talk with us. We see no diminution in his ability to talk with us." He said he believed Mr. Pan could stand trial shortly after being released from the hospital but he was unsure when that would be.

Gerald Lefcourt, Ms. Hou's attorney, agreed to the delay. He told the judge that his team has no plans to try to split her trial from Mr. Pan's because his testimony is needed for her defense. Prosecutors also didn't object to the delay.

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